The Importance of Bringing Affordable Medicine to the Public: An Interview with Imprimis Pharmaceuticals CEO Mark Baum

The saga of Martin Shkreli has already been a long and bizarre tale. The former CEO of Turing Pharmaceuticals made headlines when he boosted the price of Daraprim, an essential drug in treating toxoplasmosis, a parasite that especially affects HIV patients and pregnant women. This company putting its profits ahead of the needs of patients dealing with a very serious illness represented something of a shock to the system, even if it’s a more common practice than many realize.

That’s why news last October that Imprimis Pharmaceuticals (IMMY) was offering a drug compound alternative to Daraprim for about $1 a pill was well-received by people inside and out of the pharmaceutical industry. It was a sign that the solutions to exorbitant prices for prescription drugs could lie within the sector itself, using market-based solutions to build a healthcare industry that is responsive to patients.

Equities.com got a chance to talk with Mark Baum, CEO of Imprimis Pharmaceuticals, about why his company is adopting this strategy and how he thinks it could help build a more equitable market for prescription drugs.

EQ: A lot of people may not completely understand what drug compounding is. Could you briefly talk about what that process entails and how it allows you to bring treatments to market at lower prices?

Mark Baum: Compounding is an integral part of our national healthcare system, and hospitals, physicians and patients rely on safe, high-quality compounded drugs every day across our country. Historically, compounding pharmacies were the original pharmaceutical companies. Compounding pharmacies work with physicians to develop medications for individually identified patients. Sometimes what works well for one patient has applicability for large patient populations. We look for formulations that can help individuals and that also have broad market appeal.

Specifically, we take off-patent FDA-approved drugs that are in many cases 30-, 40-, 50-, even 60-years old and develop new proprietary compounded medications without the costs and risks associated with new drug clinical development programs. These drugs are well characterized in the medical literature and have been made and dispensed, in most cases, millions and millions of times. They are made of standard USP/NF drug monograph components with drug master files submitted to the FDA.

EQ: There was a lot of outrage of Martin Shkreli and Turing raising prices on Daraprim, and your company has been heralded for offering a low-cost alternative. Can you talk about why offering a $1 a pill alternative is a strategy that's beneficial to your shareholders?

Mark Baum: I was personally outraged with Turing’s decision to increase the price of Daraprim by 5,000% and immediately went to work with my team to develop a cost-effective therapeutic compounded alternative to Daraprim. Although this is a relatively small patient population, our margins are still healthy even with pricing of $0.99 versus the $750 per tablet cost of Daraprim.

Although a “for-profit” company, financial benefit shouldn’t always be the motivating factor, especially when there is a clear path to be able to help out these patients who found their current medication was increasing overnight by 5,000%. We are also focused in other therapeutic markets representing significant opportunities – billions of dollars.

For example, our Dropless Therapy formulations represents a multi-billion market opportunity, and at the same time can save Medicare, Medicaid, and patients up to $13 billion over a 10-year period based on a co-sponsored economic study by Andrew Chang & Co, LLC. Although we recognize we may not attain 100% of the market, we believe we can achieve a sizable percentage of each market. We believe our plan to help decrease drug costs for patients and payors is consistent with our mission, vision, and values, and will in turn increase long term value for our shareholders.

EQ: To what degree do you think your approach is scalable? Is this a sign that that market-based solutions can be better leveraged to reduce costs in the healthcare industry?

Mark Baum: Some of the recent exorbitant price hikes to older off-patent drugs by companies such as Turing Pharmaceuticals, Retrophin (RTRX), Valeant (VRX), and others are the result of there being no generic alternatives or little to no competition. This competition vacuum creates artificial legal monopolies for some companies, which has led to the massive price hikes we have seen over the past few years. This doesn’t represent capitalism to me.

As Dr. Janet Woodcock testified during the recent February 4, 2016 House Oversight and Government Reform Committee hearing on the high cost of prescription drug prices, even eliminating the entire backlog of generic drug applications now before the FDA will still leave about 12% of drugs for which there was not and likely will not be generic competition. As a result, as Dr. Woodcock warned, “there will still be problems with drugs that don’t have generic competition.”

We are responding to the needs of real people with real and immediate problems by offering therapeutically-relevant low-cost solutions to some high-priced FDA-approved drugs that simply do not, and according to the FDA, likely will not have any competition. We want to expand our ability to serve other patients who have fallen victim to predatory pricing.

EQ: Imprimis also isn't limited to just an alternative to Daraprim. Why don't you talk a little bit about the rest of your product pipeline?

Mark Baum: Under our Imprimis Cares™ program, we own, market, and sell a portfolio of lower-cost compounded therapeutic alternatives to high priced FDA-approved drugs in several therapeutic areas including ophthalmology, urology, otolaryngology, and infectious diseases. This program aligns with our corporate mission, vision, and values of providing physicians and their patients with high quality individualized compounded medications at accessible prices.

Our otolaryngology business includes topical compounded sinus formulations, delivery systems and patented packaging. In addition to our Daraprim alternative, we recently announced plans to introduce a low cost alternative to the high cost FDA-approved Thiola® for cystinuria patients. Cystinuria is a chronic disorder that may affect an estimated 7,000 to 10,000 people in the U.S. with annual costs per patient exceeding $100,000. Our compounded alternative containing tiopronin, the active drug ingredient in Thiola, and potassium citrate, may reduce the cost of therapy by more than 70%.

We plan to expand our Imprimis Cares program and introduce additional customizable compounded drug formulations for other patient populations who have experienced excessive price increases to their medications. We are also focused on developing and dispensing a portfolio of non-proprietary compounded drugs for humans and animals in therapeutic areas that may be overlooked by commercial pharmaceutical companies. We also offer customizable compounding consisting of sterile injectable and non-sterile integrative medicine therapies that are used in various therapeutic areas including oncology, oncology, autoimmunity, chronic infectious diseases, and endocrine and metabolic diseases.

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